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MarketScreener Homepage  >  Equities  >  Nasdaq  >  AMERISAFE, Inc.    AMSF

AMERISAFE, INC.

(AMSF)
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AMERISAFE Announces 2019 Fourth Quarter and Year-End Results

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02/19/2020 | 04:31pm EDT

DERIDDER, La., Feb. 19, 2020 (GLOBE NEWSWIRE) -- AMERISAFE, Inc. (Nasdaq: AMSF), a specialty provider of workers’ compensation insurance focused on high hazard industries, today announced results for the fourth quarter and year ended December 31, 2019.

 Three Months Ended   Twelve Months Ended  
 December 31,   December 31,  
  2019   2018  % Change  2019   2018  % Change
              
 (in thousands, except per share data)   (in thousands, except per share data)  
Net premiums earned$82,277  $88,837  -7.4% $332,888  $350,326  -5.0%
Net investment income 8,035   8,056  -0.3%  32,483   30,452  6.7%
Net realized losses on investments, pretax (53)  (65) -18.5%  (80)  (1,536) NM 
Net income 34,014   18,806  80.9%  92,690   71,632  29.4%
Diluted earnings per share$1.76  $0.98  79.6% $4.80  $3.71  29.4%
Operating net income 32,797   20,711  58.4%  88,994   74,495  19.5%
Operating earnings per share$1.70  $1.07  58.9% $4.60  $3.86  19.2%
Book value per share$22.29  $21.26  4.8% $22.29  $21.26  4.8%
Net combined ratio 59.6%  81.0%    76.6%  82.9%  
Return on average equity 30.3%  17.3%    22.1%  17.2%  
            

G. Janelle Frost, President and Chief Executive Officer, noted, “The current soft market is unique in its challenges given the state of the property and casualty industry.  AMERISAFE is a specialist, and our distinctive approach to workers’ compensation produced another year of excellent financial results.  We reported a combined ratio of 76.6% and a return on average equity of 22.1% in 2019, the fourth year of workers’ compensation rate declines.  For AMERISAFE, less than anticipated average loss severity for prior years offset the impact of lower premiums.”

        
INSURANCE RESULTS       
        
 Three Months Ended   Twelve Months Ended  
 December 31,   December 31,  
  2019   2018  % Change  2019   2018  % Change
              
 (in thousands)   (in thousands)  
            
Gross premiums written$70,706  $75,328  -6.1% $333,460  $351,696  -5.2%
Net premiums earned 82,277   88,837  -7.4%  332,888   350,326  -5.0%
Loss and loss adjustment expenses incurred 33,535   52,055  -35.6%  176,342   204,891  -13.9%
Underwriting and certain other operating costs,          
commissions, salaries and benefits 14,681   18,979  -22.6%  74,351   81,133  -8.4%
Policyholder dividends 797   858  -7.1%  4,160   4,148  0.3%
Underwriting profit (pre-tax)$33,264  $16,945  96.3% $78,035  $60,154  29.7%
            
Insurance Ratios:           
Current accident year loss ratio 72.5%  71.5%    72.5%  71.5%  
Prior accident year loss ratio -31.7%  -12.9%    -19.5%  -13.0%  
Net loss ratio 40.8%  58.6%    53.0%  58.5%  
Net underwriting expense ratio . 17.8%  21.4%    22.3%  23.2%  
Net dividend ratio 1.0%  1.0%    1.3%  1.2%  
Net combined ratio 59.6%  81.0%    76.6%  82.9%  
            
  • Gross premiums written in the fourth quarter of 2019 decreased by $4.6 million, or 6.1%, compared with the fourth quarter of 2018, primarily due to continued declines in approved loss costs in the states in which we write business.  For the full year, gross written premiums decreased by 5.2%. 

  • Voluntary premiums on policies written in the quarter were 8.2% lower than the fourth quarter of 2018, and 6.9% lower for the full year.

  • Payroll audits and related premium adjustments increased premiums written by $4.0 million in the fourth quarter of 2019, compared to $2.3 million in the fourth quarter of 2018.  For the full year 2019, audits and related premium adjustments added $12.3 million to premiums, compared to $7.3 million in 2018, an increase of $5.0 million. 

  • The current accident year loss ratio for the fourth quarter was 72.5%, unchanged from the first three quarters of 2019, and an increase of 1.0 percentage point from the 71.5% ratio for the full year 2018. During the quarter, the Company experienced favorable net loss reserve development for prior accident years, which reduced loss and loss adjustment expenses by $26.1 million, primarily from accident years 2014 through 2017.  For the full year, the company experienced favorable development on prior accident years of $65.0 million, compared with $45.6 million in 2018. The Company attributes its lower claim severities for prior years to benign medical inflation and its claims handling.  The Company anticipates that its current accident year loss ratio will be unchanged for 2020, unless there are unforeseen changes in macro conditions.    

  • For the quarter ended December 31, 2019, the underwriting expense ratio was 17.8% compared with 21.4% in the same quarter in 2018. The decrease in the expense ratio in the fourth quarter was primarily due to the end of an assessment related to a multiple injury fund, which lowered expenses by $3.5 million.  For the year ended December 31, 2019, the underwriting expense ratio was 22.3%, compared with 23.2% in 2018.

  • The effective tax rate for the quarter ended December 31, 2019 was 20.8%, compared with 17.4% for the fourth quarter of 2018.  The effective tax rate for the full year 2019 was 19.8% compared with 18.2% for 2018.  Both rates increased in the quarter and year end period, due to increased taxable income from stronger underwriting profitability and lower expenses.
        
INVESTMENT RESULTS       
        
 Three Months Ended   Twelve Months Ended  
 December 31,   December 31,  
  2019   2018  % Change  2019   2018  % Change
              
 (in thousands)   (in thousands)  
Net investment income$8,035  $8,056  -0.3% $32,483  $30,452  6.7%
Net realized losses on investments (pre-tax) (53)  (65) -18.5%  (80)  (1,536) NM 
Net unrealized gains (losses) on equity securities (pre-tax) 1,593   (2,347) NM   4,758   (2,088) NM 
Pre-tax investment yield 2.7%  2.7%     2.8%  2.6%   
Tax-equivalent yield (1) 3.1%  3.2%     3.1%  3.2%   
________________________________          
 
(1)  The tax equivalent yield is calculated using the effective interest rate and the appropriate marginal tax rate.
 
  • Net investment income for the quarter ended December 31, 2019, decreased 0.3% to $8.0 million from $8.1 million in the fourth quarter of 2018, due to a slightly smaller investment portfolio.  For the full year 2019, net investment income was $32.5 million compared with $30.5 million for 2018, an increase of 6.7%, due to slightly higher yields on fixed income securities.

  • As of December 31, 2019, the carrying value of AMERISAFE’s investment portfolio, including cash and cash equivalents, was $1.2 billion.  

CAPITAL MANAGEMENT

In an accompanying announcement, the Company’s Board of Directors increased the regular quarterly dividend 8% from $0.25 per share to $0.27 per share, payable on March 27, 2020 to shareholders of record as of March 13, 2020.

     
SUPPLEMENTAL INFORMATION    
  Three Months Ended Twelve Months Ended
  December 31, December 31,
   2019   2018   2019   2018 
                 
  (in thousands, except share and per share data)
                 
Net income $34,014  $18,806  $92,690  $71,632 
Less:                
Net realized losses on investments  (53)  (65)  (80)  (1,536)
Net unrealized gains (losses) on equity securities  1,593   (2,347)  4,758   (2,088)
Tax effect (1)  (323)  507   (982)  761 
Operating net income (2) $32,797  $20,711  $88,994  $74,495 
                 
Average shareholders’ equity (3) $449,472  $434,379  $419,989  $417,593 
Less:                
Average accumulated other comprehensive income (loss)  12,413   (2,517)  5,690   1,390 
Average adjusted shareholders’ equity $437,059  $436,896  $414,299  $416,203 
                 
Diluted weighted average common shares  19,321,394   19,284,923   19,329,238   19,293,082 
                 
Return on average equity (4)  30.3%  17.3%  22.1%  17.2%
Operating return on average adjusted equity (2)  30.0%  19.0%  21.5%  17.9%
Diluted earnings per share $1.76  $0.98  $4.80  $3.71 
Operating earnings per share (2) $1.70  $1.07  $4.60  $3.86 
________________________________                

(1) The tax effect of net realized losses on investments and net unrealized gains (losses) on equity securities is calculated with an effective tax rate of 21%.
(2) Operating net income, operating return on average adjusted equity and operating earnings per share are non-GAAP financial measures. Management believes that investors’ understanding of core operating performance is enhanced by AMERISAFE’s disclosure of these financial measures.
(3) Average shareholders’ equity is calculated by taking the average of the beginning and ending shareholders’ equity.
(4) Return on average equity is calculated by dividing the annualized net income by the average shareholders’ equity.

CONFERENCE CALL INFORMATION

AMERISAFE has scheduled a conference call for February 20, 2020, at 10:30 a.m. Eastern Time to discuss the results for the quarter and comment on future periods.  To participate in the conference call, dial 323-794-2423 (Conference Code 1019192) at least ten minutes before the call begins.

Investors, analysts and the general public will also have the opportunity to listen to the conference call over the Internet by visiting the “Investor Relations Home” page of the “Investors” section of the Company’s website (http://www.amerisafe.com).  To listen to the live call on the web, please visit the website at least fifteen minutes before the call begins to register, download and install any necessary audio software. For those who cannot listen to the live webcast, an archive will be available shortly after the call at the same website location.

ABOUT AMERISAFE

AMERISAFE, Inc. is a specialty provider of workers’ compensation insurance focused on small to mid-sized employers engaged in hazardous industries, principally construction, trucking, logging and lumber, manufacturing, and agriculture. AMERISAFE actively markets workers’ compensation insurance in 27 states.

FORWARD LOOKING STATEMENTS

Statements made in this press release that are not historical facts, including statements accompanied by words such as “will,” “believe,” “anticipate,” “expect,” “estimate,” or similar words are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding AMERISAFE’s plans and performance. These statements are based on management’s estimates, assumptions and projections as of the date of this release and are not guarantees of future performance and include statements regarding management’s views and expectations of the workers’ compensation market, the Company’s growth opportunities, underwriting margins and actions by competitors. Actual results may differ materially from the results expressed or implied in these statements if the underlying assumptions prove to be incorrect or as the results of risks, uncertainties and other factors including the factors set forth in the Company’s filings with the Securities and Exchange Commission, including AMERISAFE’s Annual Report on Form 10-K.  AMERISAFE cautions you not to place undue reliance on the forward-looking statements contained in this release. AMERISAFE does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this release.

- Tables to Follow -

 
 
AMERISAFE, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(in thousands)
 
  Three Months Ended Twelve Months Ended
  December 31, December 31,
   2019   2018   2019   2018 
             
             
  (unaudited) (unaudited)  
Revenues:        
Gross premiums written $70,706  $75,328  $333,460  $351,696 
Ceded premiums written  (2,191)  (2,362)  (8,995)  (9,344)
Net premiums written $68,515  $72,966  $324,465  $342,352 
         
Net premiums earned $82,277  $88,837  $332,888  $350,326 
Net investment income  8,035   8,056   32,483   30,452 
Net realized losses on investments  (53)  (65)  (80)  (1,536)
Net unrealized gains (losses) on equity securities  1,593   (2,347)  4,758   (2,088)
Fee and other income  87   188   321   599 
Total revenues  91,939   94,669   370,370   377,753 
         
Expenses:        
Loss and loss adjustment expenses incurred  33,535   52,055   176,342   204,891 
Underwriting and other operating costs  14,681   18,979   74,351   81,133 
Policyholder dividends  797   858   4,160   4,148 
Total expenses  49,013   71,892   254,853   290,172 
         
Income before taxes  42,926   22,777   115,517   87,581 
Income tax expense  8,912   3,971   22,827   15,949 
Net income $34,014  $18,806  $92,690  $71,632 
         
         
AMERISAFE, INC. AND SUBSIDIARIES
Consolidated Statements of Income (cont.)
(in thousands, except per share amounts)
  Three Months Ended Twelve Months Ended
  December 31, December 31,
   2019   2018   2019   2018 
             
             
  (unaudited) (unaudited)  
Basic EPS:        
Net income $34,014  $18,806  $92,690  $71,632 
         
Basic weighted average common shares  19,263,723   19,223,189   19,248,657   19,208,978 
Basic earnings per share $1.77  $0.98  $4.82  $3.73 
         
Diluted EPS:        
Net income $34,014  $18,806  $92,690  $71,632 
         
Diluted weighted average common shares:        
Weighted average common shares  19,263,723   19,223,189   19,248,657   19,208,978 
Stock options and restricted stock  57,671   61,734   80,581   84,104 
Diluted weighted average common shares  19,321,394   19,284,923   19,329,238   19,293,082 
         
Diluted earnings per share $1.76  $0.98  $4.80  $3.71 
         


AMERISAFE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands)
 
 December 31, December 31,
 2019 2018
 (unaudited)  
Assets   
Investments$1,125,018 $1,125,490
Cash and cash equivalents 43,813  40,344
Amounts recoverable from reinsurers 95,913  112,006
Premiums receivable, net 157,953  162,478
Deferred income taxes 17,513  21,852
Deferred policy acquisition costs 19,048  19,734
Other assets 33,648  34,027
 $1,492,906 $1,515,931
    
Liabilities and Shareholders’ Equity   
Liabilities:   
Reserves for loss and loss adjustment expenses$772,887 $798,409
Unearned premiums 140,873  149,296
Insurance-related assessments 22,967  28,258
Other liabilities 125,964  130,206
    
Shareholders’ equity 430,215  409,762
Total liabilities and shareholders’ equity$1,492,906 $1,515,931
    

Neal A. Fuller, EVP & CFO
AMERISAFE
337.463.9052

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© GlobeNewswire 2020
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Sales 2020 348 M
EBIT 2020 74,3 M
Net income 2020 56,1 M
Debt 2020 -
Yield 2020 1,87%
P/E ratio 2020 19,9x
P/E ratio 2021 20,0x
Capi. / Sales2020 3,20x
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AMERISAFE, Inc. Technical Analysis Chart | AMSF | US03071H1005 | MarketScreener
Technical analysis trends AMERISAFE, INC.
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Last Close Price 57,63  $
Spread / Highest target 51,0%
Spread / Average Target 44,9%
Spread / Lowest Target 38,8%
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NameTitle
Gerry Janelle Frost President, Chief Executive Officer & Director
Jared A. Morris Chairman
Neal Andrew Fuller CFO, Principal Accounting Officer & Executive VP
Millard E. Morris Independent Director
Randall E. Roach Independent Director
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